### Hurricane Sandy to Raise Prices on Used CarsThe immediate impact of Hurricane Sandy was devastating, and the storm’s ripple effects will continue to be felt in the weeks and months ahead as communities work to recover. One side effect becoming apparent is Sandy’s influence on the used car market.According to the Detroit Free Press, the destruction of some 250,000 vehicles has led to a shortage that could affect late-model used vehicle prices nationwide. The National Auto Dealers Association estimates that prices could increase 0.5% to 1.5%. That may not seem like much ($50–$175 per vehicle), but Edmunds.com suggests that in the short term, prices could jump $700 to $1,000.**Graph Explanation: Market for Used Cars**- The graph shows the supply and demand for used cars before and after Hurricane Sandy.- **Axes**: The vertical axis represents the "Price of Used Cars" in dollars, ranging from $18,000 to $23,000. The horizontal axis represents "Quantity" in cars per day, ranging from 6,000 to 11,000.- **Pre-hurricane Supply and Demand**: The pre-hurricane supply and market demand intersect at a point, indicating the equilibrium price and quantity before the hurricane.- **Post-hurricane Supply**: There is a new supply line labeled "Post-hurricane Supply," which is positioned to show reduced supply, thus intersecting the demand curve at a higher price point, indicating increased prices and reduced quantity availability.### Questions and AnswersBased on the News Wire:a. What is the initial (pre-hurricane) equilibrium price? - **Answer:**b. How large is the pre-hurricane shortage? - **Answer:**c. What is the post-hurricane equilibrium price? - **Answer:**d. What is the pre-hurricane quantity? - **Answer:**e. What is the post-hurricane quantity? - **Answer:**f. How large is the post-hurricane shortage at the pre-hurricane equilibrium price? - **Answer:** Please review the graph and fill in the answers based on the provided information._Source: George Kennedy, Autoblog, November 10, 2012. © 2012 AOL Inc. All rights reserved._

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider each of the scenarios before, and explain what the effect of the given changes would be on the market for the good in bold that was originally in equilibrium. State which curve(s) shift (supply, demand, both, neither), and whether price and quantity are higher or lower after the change, or if this is not possible to determine. (a) An increase in the cost of dorm rooms on the market for apartments in the U-district? (b) The government increases the consumption tax rate for consumersp by 5% on the market for Rolex watches? (c) The increase in price of milk on cakes? Note: The solution should not be hand written.
Two drivers – Tom and Jerry – each drive up to a gas station. Without looking at the price of gas, each one places an order with the pump attendant. Tom says, “I’d like 10 gallons of gas.” Jerry says, “I’d like $10 of gas.” What is each driver’s price-elasticity of demand for gas (give the Ed-value for each)?
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Waterfront homes have an inelastic supply and electric scooters have an elastic supply. Suppose that arise in population doubles the demand for both products. a) Graph the scenario for waterfront homes.Graph the scenario for electric scooters. See attached documents for graphs. What happens to theequilibrium price and quantity in each market? Response: In each of these cases the equilibrium prices goup, quantity in the scooters goes up, and the waterfront homes quantity does not change. b) Whichproduct experiences a larger change in price? Waterfront homes Why? There is an abundance in thedemand at the initial price so then this increases the price of waterfront homes. Explain the role ofelasticity in the change. c) Which product experiences a larger change in quantity? Electric ScootersWhy? Electric Scooters are an inelastic product. Explain the role of elasticity in the change. d) Whathappens to total consumer spending on each product? As the price and quantity goes up for…
How will a simultaneous increase in the price of a substitute good and an improvement in production technology affect market demand and/or supply, equilibrium price and equilibrium quantity in a competitive market?
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